Netanyahu: Drought Tax to Be Suspended in January

Knesset sources: Finance Min. Yuval Steinitz is expected to agree to suspend the levy as of January 2010.

Prime Minister Benjamin Netanyahu has ordered the drought tax to be suspended as of January 2010, and the plans to hike water rates will be put off. Sunday evening, as Netanyahu was posed to depart for the United States, the director-general of the Prime Minister's Office Eyal Gabai was asked to reach an agreement to this effect with the finance and national infrastructure ministries before the prime minister returns tomorrow.

Meanwhile, National Infrastructure Minster Uzi Landau announced that he would submit a proposal to reduce or suspend the drought tax based on the amount of rainfall this winter. Landau will also propose that the money collected from the levy be transferred to management of the water economy, rather than directed into the state's tax coffers.

At a press conference held Monday by the national infrastructure ministry, Landau said the funds collected through the drought tax had never been the end goal, but in fact a tool to attain an important result - saving water. He explained that the levy was used to achieve a target of a 10% reduction in household water consumption, and that in practice that consumption had fallen by 15% this past summer compared to the summer of 2008. "The target for the summer was fully achieved and even exceeded, and we would not have been able to accomplish this without levying the tax," Landau added.

Knesset sources say Finance Minister Yuval Steinitz is expected to agree to suspend the levy as of January 2010, in spite of his announcement on Sunday that the matter should only be considered at the end of the winter. The Knesset Finance Committee met to discuss the matter yesterday, and chairman Moshe Gafni announced that he would enable the government to draw up its decision to suspend both the drought tax and the plan to raise water rates within about ten days.